Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Council of the Law Society of NSW v Lyons [2013] NSWADT 253 Hearing dates: 31 October 2013 Decision date: 31 October 2013 Jurisdiction: Legal Services Division Before: M Chesterman, Deputy President J Wakefield, Judicial Member J Butlin, Non-judicial Member Decision: 1. The Respondent is guilty of unsatisfactory professional conduct on Ground 1 and on Ground 2. 2. The Respondent is reprimanded. 3. The Respondent is fined $2,000. 4. The Respondent is to pay the Applicant's costs as agreed or assessed. 5. The Complainant's claim for compensation is set down for directions at 10 a.m. on 4 December 2013. Catchwords: Solicitor - disciplinary application - failures to respond to correspondence from client - breach of Rule 8 of Revised Professional Conduct and Practice Rules Legislation Cited: Legal Profession Act 2004 Revised Professional Conduct and Practice Rules 1995 (Solicitors' Rules) Cases Cited: Council of the Law Society of NSW v Lyons [2012] NSWADT 166 Law Society of New South Wales v Carbone [2011] NSWADT 32 Category: Principal judgment Parties: Council of the Law Society of New South Wales (Applicant) James William Lyons (Respondent) Representation: L Pierotti (Applicant) No appearance (Respondent) File Number(s): 132012 reasons for decision Introduction 1In an Application filed on 16 July 2013 and amended in a minor respect at the hearing of this matter, the Council of the Law Society of New South Wales ('the Law Society') alleged that the Respondent, James William Lyons ('the Solicitor'), had engaged in unsatisfactory professional conduct on two Grounds. 2In the Application, the Law Society sought orders that the Solicitor be reprimanded, that he pay a 'substantial fine' and that he pay the Society's costs as agreed or assessed. 3The Application contained a statement that the Complainant, Mrs Margaret Morton, 'seeks compensation the nature of which is to be advised'. 4In a Reply dated 26 July 2013 and filed on 30 July, the Solicitor admitted each of the two Grounds stated in the Application. In a letter of the same date to the Registrar, he confirmed this admission. In that letter, he also indicated that he had received the relevant documentation from the Law Society, that he was happy for the Tribunal to make a determination as to penalty, in chambers or at a hearing, and that he did not wish to appear or make submissions. 5The matter came before us for hearing on 1 November 2013. Mr Pierotti appeared for the Law Society. There was no appearance by or on behalf of the Solicitor. 6Mr Pierotti tendered an affidavit sworn on 17 June 2013 by Ms Anne-Marie Foord, solicitor for the Law Society. He addressed us briefly. 7We gave consideration to the admitted evidence, the Reply and associated correspondence received from the Solicitor and Mr Pierotti's submissions. We then made the following orders:- 1. The Respondent is guilty of unsatisfactory professional conduct on Ground 1 and on Ground 2. 2. The Respondent is reprimanded. 3. The Respondent is fined $2,000. 4. The Respondent is to pay the Applicant's costs as agreed or assessed. 5. The Complainant's claim for compensation is set down for directions at 10 a.m. on 4 December 2013. 8We indicated further that we would publish our reasons at a later date. The following paragraphs constitute those reasons. The matters alleged in the Application 9The two Grounds of the Application stated as follows with reference to the Solicitor:- 1. He failed to respond to the complainant's correspondence. 2. He failed to comply with Rule 8 of the Revised Professional Conduct & Practice Rules. 10The accompanying Particulars were in the following terms:- In these Particulars:- 'the Solicitor' means James William Lyons 'the client' means Margaret Morton 'the Society' means The Law Society of New South Wales 1. In or about November 2009 the client retained the Solicitor to act for her on the purchase of a property at 19 Dans Avenue, Coogee ("the purchase"). 2. Contracts on the purchase were exchanged on 20 November 2009 and settlement occurred on 26 February 2010. 3. Subsequent to settlement of the purchase and the client commencing to reside at the property at 19 Dans Avenue, Coogee ("the property"), a number of issues arose in relation to the construction of the property. As a result of these construction issues arising, the client considered the making of a claim against the vendor ("the claim"). 4. To enable preparation of the claim, contact was made with the Solicitor with a view to retrieving the Solicitor's file on the purchase ("the conveyancing file"). 5.The first request for the conveyancing file was made in about September 2011 by 6. Ms Cecilia Lamsam, the personal assistant to the client's husband. Ms Lamsam was informed by the Solicitor that the conveyancing file had been destroyed. (sic) 7. On 6 September 2011 the client's husband received three (3) e-mails from the Solicitor enclosing various copy documents relating to the conveyance. These documents did not constitute the totality of the conveyancing file. 8. On 21 November 2011 the client wrote to the Solicitor noting his advices as to the destruction of the conveyancing file and requesting that he again check for the file and inform her in writing as to whether the conveyancing file was or was not retained by him. The Solicitor did not respond to this letter. 9. On 9 January 2012 the client wrote to the Solicitor noting that she had not received his reply to her 21 November 2011 letter and asking for his response to it. The Solicitor did not respond to this letter. 10. The Solicitor has admitted that he did not retain the entirety of the conveyancing file and that he likely did not answer the client's correspondence. Findings in relation to the Solicitor's conduct 11Having examined relevant documents annexed to Ms Foord's affidavit, and taking into account the Solicitor's unqualified admissions, we are satisfied that the matters alleged in the Particulars are sufficiently established by the evidence. 12With regard to Ground 1, our opinion, with which Mr Pierotti concurred, is that not every instance of failure by a solicitor to respond to correspondence from a client would amount to unsatisfactory professional conduct. But in this case the failure of the Solicitor on two separate occasions (in November 2011 and January 2012 respectively) to furnish any answer at all to the inquiries made by the Complainant, a former client, about the destruction of the file relating to her purchase constituted a serious breach of his professional responsibilities. It was, or should have been, apparent to the Solicitor that retrieval of this file was a matter of great importance to the Complainant. 13We accordingly find, as Mr Pierotti submitted, that the Solicitor's conduct in ignoring these two inquiries by his former client fell within the definition of unsatisfactory professional conduct in section 496 of the Legal Profession Act 2004 ('the Act'). It was conduct 'occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian legal practitioner'. 14For the purposes of Ground 2, the relevant provision within the Revised Professional Conduct and Practice Rules 1995 (Solicitors' Rules) is Rule 8.2.1. This states:- 8.2.1 A practitioner must retain, securely and confidentially, documents to which a client is entitled, for the duration of the practitioner's retainer and at least seven (7) years thereafter, or until such time as the practitioner gives them to the client or another person authorised by the client to receive them, or the client instructs the practitioner to deal with them in some other manner. 15In this case, the period during which the Solicitor retained the Complainant's file as required by Rule 8.2.1 was, at most, about 18 months. His retainer came to an end on 26 February 2010 or shortly thereafter. Early in September 2011, he told Ms Lamsam that the file had been destroyed. 16In a letter to the Law Society dated 22 March 2012, the Solicitor sought to explain his decision to destroy the Complainant's file. He said that he had been 'winding down' his practice for about three years, that he no longer had the capacity to store clients' files, and that he had accordingly adopted the practice of scanning documents to his PC, with backups. He acknowledged, however, that this was not done in relation to the Complainant's file. He enclosed with this letter a 'computerised memory stick' for transmission to the Complainant and indicated that he had asked the vendor's solicitors for copies of any relevant documents that they had retained. 17We agree with a submission by Mr Pierotti that these 'excuses' were 'insufficient'. 18In Law Society of New South Wales v Carbone [2011] NSWADT 32 at [61 - 62], the Tribunal held that the conduct of the respondent solicitor in destroying a file on a client's matter about six years after his retainer ceased, and thereby breaching Rule 8.2.1, amounted to unsatisfactory professional conduct. It rejected a submission by the Law Society that this should be characterised as professional misconduct. 19In the present proceedings, the Solicitor's breach of his obligation to retain his former client's file for seven years subsisted over a distinctly longer period - about five-and-a-half years - than was the case in Carbone. This reinforces the Law Society's contention that his breach amounted to unsatisfactory professional conduct. The Society did not seek a finding of professional misconduct in these proceedings and, like the Tribunal in Carbone, we do not believe that such a finding would be warranted. 20We make a finding of unsatisfactory professional conduct in relation to Ground 2. It is based on section 496 of the Act, and also on section 498(1)(a), which provides that a contravention of the legal profession rules is 'capable of being' unsatisfactory professional conduct. The questions of penalty and costs 21Mr Pierotti drew to our attention a recent decision by the Tribunal (Council of the Law Society of NSW v Lyons [2012] NSWADT 166), made in disciplinary proceedings against the Solicitor. In it, the Tribunal found, on the basis of a Statement of Agreed Facts forming part of an Instrument of Consent, that the Solicitor had borrowed money from a client in breach of Rule 12 of the Revised Professional Conduct and Practice Rules 1995 (Solicitors' Rules). The Tribunal held that the Solicitor was guilty of professional misconduct and ordered that he be reprimanded and fined the sum of $6,000. 22Mr Pierotti pointed out that although the Solicitor's contraventions of Rule 12 described in this decision occurred some years ago (i.e., during 2007 and 2008), he engaged in the conduct to which the present proceedings relate at a time when he knew that these contraventions might well prompt the Law Society to institute disciplinary proceedings against him. According to Mr Pierotti, this strengthened the Law Society's contention that a 'substantial fine' should now be imposed on him, as also did the nature and the seriousness of the professional misconduct described in the Tribunal's decision. 23It was acknowledged in Mr Pierotti' submissions, however, that the Solicitor's letter of 22 March 2012 to which we referred above, constituted his first response to the complaint made against him by the Complainant and that in this response he admitted that he had failed to retain her file. 24In the light of this admission, it is surprising that in a later letter to the Law Society, dated 5 March 2013, the Solicitor appeared not to understand the implications of his conduct. He argued that because (as he understood the situation) the Complainant now had a 'complete and reconstructed copy' of her file, there was no good reason why the Law Society should continue to pursue her complaint. 25We have no doubt that the first of the orders sought by the Law Society by way of penalty - namely, a reprimand - is warranted in these circumstances. 26We have no doubt that a fine is also warranted. As to the scale of any such fine, Mr Pierotti's submission (if we understood him correctly) was that an amount approaching the sum of $6,000 previously imposed on the Solicitor would be appropriate. 27In our opinion, two considerations in particular suggest that this amount would be excessive. These are (a) that in the earlier proceedings, the Solicitor was found to have committed professional misconduct, not (as here) unsatisfactory professional conduct, and (b) the amount of the fine imposed for similar conduct in Carbone was only $2,000. 28Our conclusion is that a fine of $2,000 is adequate in the circumstances. 29The Solicitor's liability to pay the Law Society's costs arises under section 566(1) of the Act. This states that unless 'exceptional circumstances' are established to the satisfaction of the Tribunal, it must make a costs order against an Australian legal practitioner whom it has found guilty of professional misconduct or unsatisfactory professional conduct. No evidence of 'exceptional circumstances' was put before us. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 November 2013